Columns & Interviews


Practical Application of Research Results by Drug Discovery and Development Carve-out

Realization of a new drug from the basic research results of academia (hereafter referred to as "drug discovery and development") is a long-lasting process, taking approximately 10 to 15 years1. Those processes are ranging from identifying the causes of diseases that determine the concept of new drugs, discovery and creation of new drug seeds that serve as new drug candidates (basic and applied research), study of the efficacy and safety of new drugs (nonclinical studies), evaluation of efficacy and safety in human (clinical trials), approval applications for regulatory authorities in each country, and inclusion in National Health Insurance reimbursement price list and marketing through review and approval by the regulatory authorities.
Table 1 shows the amount of investment and the probability of success in R&D for each stage up to the launch of a new drug. The stages are; TTH (Target to Hit) -  which means screening hit compounds in vitro or in vivo, HTL (Hit To Lead) - Creation of lead compounds, LO (Lead Optimization) - Optimization of lead compounds, PC (Pre-Clinical trial) - Non-clinical trials, PHI (Phase I clinical trial) -  Testing an experimental drug in a small number of healthy humans to confirm safety including adverse drug reactions etc., PHII (Phase II clinical trial)  - Testing an examination drug in a small number of patients to confirm its effective and safe dosage and administration methods; PHIII (Phase III clinical trial) – Testing an examination drug in patients to compare efficacy and safety with existing drugs, etc., and STL (Submission To Launch) – Market launch of new drugs after regulatory approval. As shown in Table 1, the success probability2 from basic research to product launch is 4.11% (=0.8*0.75*0.85*0.69​*0.54*0.34​*0.7*0.91)​,​ and the total investment per product is said to be 873 million dollars.

Table 1: Investment Amount, Success Probability, and Rebate Success Probabilities for Each Stage in Drug Discovery

Basic and applied research and pre-clinical trials
Clinical trials
Amount of Investment (million$) 24 49 146 62 128 185 235 44 873
Success Probability 0.8 0.75 0.85 0.69 0.54 0.34 0.7 0.91 -
Rebate Success Probability based on market launch 0.04115 0.05144 0.06859 0.08069 0.11695 0.21658 0.63700 0.91000 1.0
Nicola Dimitri (2011). An Assessment of R&D Productivity in the Pharmaceutical Industry. Trends in Pharmaceutical Science, Vol. 32, No.12, pp684

When calculated from the end of application approval stage, the rebate success probability at the time points for basic and applied studies and pre-clinical studies and PHI clinical trials is not high. But among those stages, even PHII, which has the lowest probability of success, is 0.34. And we consider that restructuring the drug discovery assets (Human resource, Technology, Funding) at each stage will increase the probability of success and promote the success of new drug realization as a whole.

We, Bio New Combinations Research Institute (BNC), are promoting “carving-out of project3 ” in drug discovery and development. To be more specific, we set up an organization (vehicle) in each stage of drug development where takes over research outcomes from owners temporary and fosters them to lead to new drug discovery and development. There are three main reasons why promoting drug discovery and development carve-out is useful for new drug research and development.
The first reason is that there may not be enough human resources appropriate for each stage in drug discovery and development. Up until new drug approvals, each stage of drug discovery and development requires different expertise. Drug discovery and development carve-out enables to invite necessary human resources to the vehicle to advance drug discovery and development. A variety of experts from universities and research institutions, pharmaceutical companies, commissioned companies, and venture capitals could work together in vehicles at different stages of new drug research and development.
The second reason is that there may be a lack of technology that is necessary to advance drug discovery and development. Drug discovery and development activities are becoming more difficult day-by-day, and required technology is also getting more sophisticated, which not all R&D type pharmaceutical companies can ensure the required technology. Drug discovery and development carve-out allows to equip the required technologies in vehicles and advance the drug discovery and development.
The third reason is that there may be a lack of funds required for each stage. As shown in Table 1, drug discovery and development project require substantial investment. Through drug discovery and development curve-out, we can procure the necessary funds at each stage from venture capitals and national research institutions and advance the drug development.
Nowadays, drug discovery and development has got more difficult and advancing drug discovery and development carve-out is becoming necessary at various stages. At the basic research stages, from elucidation of the causes of diseases to discovery of new drug candidates, AMED iD3 Booster plays an important role of vehicle of the drug development carve-out and carry out drug discovery; in particular, inviting drug seeds in academia, and reassemble and assign the most appropriate human resources, technology, and funds. As part of AMED iD3 Booster activities, BNC analyzes prospective seeds in academia quantitatively and qualitatively through partnering events for pharmaceutical companies and academia, suggests an appropriate plan for the seeds to proceed to the next stage, and then introduces to AMED iD3 Booster.
BNC has also launched a drug discovery and development carve-out venture and promotes procuring new drug candidates from pharmaceutical companies, human resources, technology, and funds suitable for the new drug candidates, at pre-clinical and clinical trial stages, which are studies of the efficacy and safety of new drug candidates and studies of efficacy and safety in human, respectively.     

In drug development carve-out targeting pharmaceutical companies, founders of BNC sourced new drug candidates in the area of aching pain from pharmaceutical companies in September 2015. We then transferred the sourced drug candidates to a drug discovery and development carve-out venture, and invested human resources, technology, and funds to promote drug development. In June 2019, the efficacy of the compounds, which a venture company had worked on, was recognized and M&A was completed by a domestic pharmaceutical company.
Drug development nowadays is difficult to be completed in one organization. Drug discovery and development carve-out is becoming an effective mean of reassemble human resources, technology, and funds necessary at each stage and lead the drug candidates to approval.
We, BNC will continue to organize DSANJ Digital Bio Conference and Face to Face Meeting (D-Bio Digital & F2F) to find optimal collaboration partners and will establish foundation for drug discovery and development through our carving-out projects.

1 The website of the Pharmaceutical Manufacturers Industry Association, (Japanese only)
2 In basic and applied research (TTH, HTL, LO), a large number of compounds for drug candidates are produced, and therefore, the probability is sometimes said to be one-thirty thousandth of the probability. (JPMA Data Book 2012)
3 In this column, “carving-out project” means conducting research and development temporary at eternal institutions in order to carry out the entire project or research and development stages as smoothly as possible.

September 2020

Tohru Yoshikawa
Director & Secretary General
Bio New Combinations Research Institute

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